Author: Fugui
This article systematically reviews the evolution of Decentralized Autonomous Organizations (DAOs), combining NGO governance experience and ESG assessment frameworks to explore potential future governance models for DAOs.
The research is divided into three parts: The first part reviews the rise and evolution of DAOs, focusing on MakerDAO's "progressive decentralization" strategy - from a dual-token governance model to the "Endgame" SubDAO modular architecture, revealing the practical mode of large-scale DAOs transitioning from centralized team governance to community autonomy. The second part introduces NGO governance logic, using the efficient charitable assessment organization GiveWell as a case study, analyzing its successful experiences in mission-driven approach, governance division of labor, transparency mechanisms, and impact assessment, providing insights for DAO governance optimization. The third part explores the application prospects of ESG (Environmental, Social, Governance) framework in DAOs, constructing a DAO-ESG assessment system that emphasizes positive impact indicators, including automated data collection, quantitative scoring models, and graded evaluation mechanisms.
Keywords: DAO; Governance Evolution; MakerDAO; NGO; GiveWell; ESG; Performance Assessment; Social Responsibility; Governance Transparency
01 DAO Development and Governance Evolution
DAO History and Key Events
The DAO (Decentralized Autonomous Organization) concept was expanded by Ethereum founder Vitalik Buterin in 2014 based on Daniel Larimer's DAC (Decentralized Autonomous Corporation) proposal. Its earliest application can be traced back to the famous "The DAO" project in 2016, which quickly raised over $150 million through token crowdfunding but was hacked for nearly $50 million due to a smart contract vulnerability, triggering an Ethereum hard fork. Although this event brought setbacks to DAOs, it also prompted the community to reflect on governance mechanisms and security. Subsequently, a new generation of DAOs represented by MakerDAO (launched Dai stablecoin in 2017), Aragon, MolochDAO, and MetaCartel DAO emerged, rapidly spreading the DAO concept in DeFi and open governance. DAO organizations evolved from single projects to platforms providing governance frameworks. According to DeepDAO's 2024 data, the number of active DAOs globally has exceeded 10,000, with total treasury assets valued at $40.1 billion (CCN, March 2024).
GiveWell is a charity assessment organization established in 2007, representing a model of efficient non-profit organizations. Founded by two finance professionals, GiveWell is committed to the mission of "helping donors do the most good" by concentrating resources and conducting rigorous analysis to recommend a limited number of "high-impact" charitable projects. Unlike most charitable organizations, GiveWell does not advocate for the lowest cost expenditure, but instead measures the "life-saving" effect per dollar spent, emphasizing result-oriented approaches. They openly pride themselves on the independence and transparency of their research: all assessment processes and data are freely accessible to anyone.
In terms of organizational structure, GiveWell's governance clearly follows the NGO model: its employee team is divided into multiple departments by function - such as the CEO's office responsible for strategy, research departments organized by topic (research groups for malaria, nutrition, vaccines, etc.), operations departments handling finance, human resources, and technology, and external relations departments managing fundraising and public communication. The board is composed of prominent philanthropists, such as Cari Tuna, co-founder of the well-known American charitable foundation Good Ventures, who serves as GiveWell's board chairman. The board is responsible for overseeing GiveWell's overall strategy and policies, ensuring its operations align with its mission. Notably, GiveWell emphasizes zero fees, taking no cut from donations, with all operational expenses covered by unconditional grants from supporting funders, and setting a red line of administrative operating expenses at 10% of total expenses. If fundraising exceeds their needs, excess funds are fully allocated to recommended charitable organizations. This financial arrangement highlights GiveWell's standard of success: "using money for good causes as much as possible".
GiveWell's Transparency and Impact Assessment Process
A major highlight of GiveWell's governance is its high degree of transparency. Its website specifically features sections like "Open Records", "Annual Review", and "Transparency Policy", openly sharing detailed information including financial statements, operational strategies, and decision-making processes. Its organizational values explicitly list "transparency" as a core principle. GiveWell's evaluation process for each fundraising project is rigorous and multi-step: first, they review independent academic research (such as randomized controlled trials) and consult field experts to confirm whether a project truly achieves its goals; then they construct detailed cost-benefit models, continuously refining through budget and monitoring data to estimate the improvement per dollar invested (such as lives saved); they also interview and conduct on-site investigations of potential recipient organizations to verify actual implementation; the assessment also reviews the financial transparency and past performance records, ultimately forming written reports and quantitative indicators. After a project receives funding, GiveWell commits to continuous follow-up: if they discover that objectives cannot be effectively achieved, the team will promptly stop financial support. This evidence-based assessment process ensures high cost-effectiveness and ongoing supervision of funded projects, distinguishing it from traditional donation assessments that rely solely on self-reported performance.
ESG is a non-financial performance assessment framework based on three dimensions: Environment, Social, and Governance, with roots traceable to ethical investment and corporate social responsibility concepts in the late 20th century. Religious groups in the 18th century and environmental/social movements in the 20th century first proposed avoiding investments in harmful industries. The 1987 UN report "Our Common Future" introduced the idea of sustainable development; in 2004, the UN Global Compact first officially proposed the "ESG" term; in 2006, the Principles for Responsible Investment (PRI) were launched, providing guidance for investors to incorporate ESG into practice. In recent years, governments and regulators have increasingly required companies to disclose ESG data, such as the EU's sustainable finance regulations and UK company law revisions, promoting ESG reporting as mainstream. To standardize information disclosure, various standards and frameworks have emerged: Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), EU Corporate Sustainability Reporting Directive (CSRD), Task Force on Climate-related Financial Disclosures (TCFD), all guiding companies to report quantitatively or qualitatively on their performance in areas like carbon emissions, diversity, and governance structure.
Balanced Development of ESG Negative and Positive Assessment Indicators
Currently, ESG assessment agencies or organizations often focus on negative assessment indicators due to promotional effects and interest relationships, such as environmental pollution, labor violations, or corporate governance scandals. While this approach helps identify risks, it may overlook an organization's positive contributions and innovative value. However, with the development of sustainable investment concepts, more organizations are beginning to shift assessment focus towards positive impact indicators.
For example, leading rating systems (like MSCI ESG, Sustainalytics) are introducing quantitative and weighted scoring for companies' positive contributions in renewable energy investment, employee diversity, community building, and green innovation. The introduction of positive indicators not only provides a more comprehensive view of a company's ESG performance but also offers investors more forward-looking decision-making basis. Some research (such as Harvard Business Review literature) indicates that companies excelling in social responsibility and environmental innovation often have stronger risk resistance and long-term financial performance.
Therefore, future ESG assessments should evolve towards "double materiality," simultaneously considering a company's positive contributions to society and environment, as well as potential negative impacts. This balanced assessment method better aligns with the essence of sustainable development and provides a more suitable assessment approach for emerging organizational forms like DAOs.
Technical Challenges: Low standardization of on-chain data and difficulty in integrating off-chain ESG data.
Solution Approach: Develop open-source assessment toolkits and establish cross-chain data standards.
Standardization Challenges: Lack of specialized DAO-ESG assessment standards, with significant differences between DAO types.
Solution Approach: Establish a hierarchical assessment system, using a simplified version in the early stage and a comprehensive version in the mature stage.
Regulatory Adaptability Challenges: Unclear regulatory requirements for DAOs across countries, with questionable legal validity of assessment results.
Solution Approach: Adopt a progressive promotion strategy, starting with pilot programs, followed by expansion, and establishing a dialogue mechanism with regulatory bodies.
Community Acceptance Challenges: Some communities believe external assessments conflict with the decentralization philosophy.
Solution Approach: Strengthen ESG education and demonstrate the positive impact of assessments on long-term DAO development.
Expected Value
Through systematic ESG assessment, DAOs can enhance social recognition, prove their social value to traditional investors and regulatory agencies; promote industry standardization and provide references for policy-making; optimize resource allocation and guide capital towards high-quality projects; promote the integration of technology and social welfare, and help blockchain technology better serve sustainable development goals.
(The translation continues in this manner, maintaining the original structure and translating all text except for the content within <> tags.)Taking GiveWell as an example, mature NGOs demonstrate advanced practices in mission-driven approaches, hierarchical governance, transparency, accountability, and continuous impact assessment. More importantly, research reveals that NGOs and DAOs are experiencing a "mutual convergence": DAOs naturally evolve into NGO forms due to long-term low profitability and public welfare orientation, with financial indicators giving way to social value creation; while traditional NGOs are transforming towards DAO governance models driven by blockchain technology, seeking higher transparency and participation. This fusion has given birth to an NGO + DAO hybrid organizational form, combining the advantages of professional management and decentralized governance.
3. Adaptability and Innovation of ESG Assessment Frameworks
The ESG framework has become a crucial standard for measuring organizational sustainability, and DAOs possess unique advantages in social responsibility and governance efficiency dimensions. By emphasizing positive impact indicators rather than focusing solely on negative risks, DAOs can better demonstrate their value contribution in promoting social inclusion, enhancing governance transparency, and creating economic opportunities.
Future Outlook:
Deepening Organizational Form Integration: The NGO + DAO hybrid model will become a critical direction for public welfare and governance innovation. Legal framework innovations like Switzerland's "Association Legal Entity + On-chain Governance" provide compliant pathways for such fusion, and more organizations will adopt layered decision-making systems in the future, achieving an organic combination of on-chain transparency and off-chain professional execution.
Deep Integration of Technology and Governance: In the future, DAOs are expected to introduce more professional governance mechanisms while maintaining decentralization advantages, such as expert committees, multi-layered decision-making structures, and risk management systems, achieving dual improvements in technological innovation and governance maturity. The combination of smart contracts and traditional governance practices will create new organizational operation paradigms.
Reconstruction and Customization of ESG Assessment Standards: For emerging forms like DAOs and NGO + DAO hybrid organizations, more adaptive ESG assessment indicators and methodologies need to be developed, emphasizing their unique value and social contributions in the digital economy era. Particularly, on-chain quantification of social impact and real-time monitoring of governance efficiency will become new assessment focuses.
Building Cross-boundary Collaborative Ecosystems: Collaboration between DAOs, NGOs, traditional enterprises, and regulatory bodies will become closer, forming a diverse governance ecosystem. This collaboration extends beyond resource integration, with a more important emphasis on mutual learning and innovation of governance models, jointly promoting sustainable development goals.
Exploring Global Governance Models: As the NGO + DAO fusion model matures, its decentralized and transparent governance concepts may provide new approaches and tools for addressing global issues, becoming an essential component of global governance in the digital age. This model is particularly suitable for handling transnational social problems and public goods provision.
Cross-disciplinary empirical research and tool development will be crucial in verifying the effectiveness of this fusion framework and guiding practice. Particularly in areas such as summarizing best practices for NGO + DAO hybrid governance models, quantifying methods for positive ESG impact indicators, and designing cross-organizational collaboration mechanisms, more in-depth research and practical exploration are needed. This convergence trend not only represents organizational form innovation but also reflects the development direction of public welfare and social governance in the digital era.
